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Who needs spy planes? The Financial Times reports that two engineers at Lucent Technologies Inc. have been arrested in New Jersey for the theft of technology secrets. It is alleged that the two – together with a third man who was also arrested but is not a Lucent employee – conspired to transfer the source code used in Lucent’s PathStar Internet voice and data transfer technology to a Chinese government-controlled data networking company that could become “the Cisco of China”. Though without the layoffs, Grok hopes.

According to the U.S. attorney for the district of New Jersey, the three set up a company – ComTriad Technologies Inc. – that was used to transfer technology developed at Lucent to ComTriad’s Chinese partner, Datang Telecom Technology and Industry Group, which is a public-traded company that is majority owned by the Chinese government.

The FT reports that “ironically” Lucent stopped making PathStar last month, although earlier the article says that PathStar earned the company US$100 million last year. The Register, more succinctly, describe the technology as “outdated” and adds that the defendants are all Chinese nationals, were “nailed by the FBI”, and were refused bail by U.S. magistrate Judge Stanley Chesler, who noted that they “posed a flight risk”. According to the Register, the three face up to five years in prison and a $250,000 fine, and had planned for the joint venture to issue stock both in China and the United States.

The BBC reveals that the engineers – or scientists as it dubs them – had been designated “distinguished members” of Lucent’s technical staff, and noted that the U.S. authorities admitted that they had no evidence that Datang had broken any laws.